MCX-SX to begin trading in equities, equity derivatives

MCX Stock Exchange (MCX-SX) will begin trading in equities and equity derivatives from February 11.

With its 40-stock index named SX40, MCX-SX is the third full-fledged equity bourse after BSE and NSE. The bourse was formally launched by Finance Minister P. Chidambaram on Saturday.

Free-float based index:

SX40 will be a free-float based index of large-cap and liquid stocks, representing diverse sectors. The base value will be 10,000 with a base date of March 31, 2010, MCX-SX Vice-Chairman Jignesh Shah said during the launch.

The index is designed to measure the economic performance with better representation of various industries and sectors based on the ICB (industry classification benchmark), a global classification from the FTSE of the London bourse.

India's per capita income rises to Rs 5,729 per month

India's per capita income, a gauge for measuring living standard, is estimated to have gone up 11.7 per cent to Rs 5,729 per month in 2012-13 at current prices, compared with Rs 5,130 in the previous fiscal.
The estimated rate of growth in per capita income for the current fiscal, however, is lower than the previous fiscal when it grew by 13.7 per cent.
"The per capita income at current prices during 2012-13 is estimated to be Rs 68,747 as compared to Rs 61,564 during 2011-12, showing a rise of 11.7 per cent," an official release by the Central Statistics Office (CSO) on Advance Estimate of National Income, 2012-13.
The per capita income in real terms (at 2004-05 constant prices) during 2012-13 is likely to attain a level of Rs 39,143 as compared to the First Revised Estimate for the year 2011-12 of Rs 38,037, it said.
The Gross Fixed Capital Formation (GFCF) at current prices is estimated at Rs 29.94 lakh crore in 2012-13 as against Rs 27.49 lakh crore in 2011-12, the release said.
However, at 2004-05 constant prices, the GFCF is estimated at Rs 19.44 lakh crore in the current fiscal as against Rs 18.97 lakh crore in the previous fiscal, it added. The data also estimated an increase of 13.8 per cent in the Government Final Consumption Expenditure (GFCE) to Rs 11.87 lakh crore at current prices for 2012-13 against Rs 10.43 lakh crore in 2011-12.
On Private Final Consumption Expenditure (PFCE) for the current fiscal, it has estimated an increase of 12.8 per cent to Rs 57.06 lakh crore at current prices as against Rs 50.56 lakh crore in the previous fiscal. "These advance estimates are based on anticipated level of agricultural and industrial production, analysis of budget estimates of government expenditure and performance of key sectors like railways, transport other than railways, communication, banking and insurance, availbale so far," said the data.

CCEA gave its nod to Price Pooling Mechanism on Coal to Control Prices of Coal

The Cabinet Committee on Economic Affairs (CCEA) on 5 February 2013 gave its principle approval for the price pooling mechanism of coal. The mechanism includes cost blending of the domestic coal with the imported one to counterbalance price hike. Basic principles and parameters of the price pooling mechanism have been identified and a specific data on the same would be created by the Power and Coal Ministries.  

The mechanism has been created before government decided to put on sale the 9.5 percent stake of the National Thermal Power Corporation (NTPC) from its present holding of 84.50 percent. The sale of the stake was approved by the Empowered Group of Ministers on disinvestment chaired by Finance Minister P Chidambaram on 5 February 2013. This disinvestment of NTPC would fetch about 12000 crore rupees for the exchequer.

BHEL and GAIL Granted Maharatna Status by the Union Government of India

The Union Government of India gave the Maharatna status to two PSUs- BHEL and GAIL on 1 February 2013. Granting Maharatna status to BHEL and GAIL will provide them with better functional and financial freedom and will also guarantee them with better valuation of the shares.

Ideally any Maharatna firm has a capacity to take investment decision of around 5000 crore Rupees without taking assistance from the government. On the other hand, forms with Navratna status have the capability of 1000 crore Rupees.

However, both BHEL and GAIL do not have enough non-official directors on the board, which is why they cannot exercise their Maharatna powers. Even though all other conditions of Maharatna status were met by both these PSUs but their boards do not have requisite number of board members. While GAIL is short of 4 independent directors, BHEL, on the other hand is short of 6 non-official directors.

In terms of turnover, networth as well as net profit, both these companies meet all the eligibility criterions.

Eligibility of a company to get a Maharatna status

•For any company to qualify for Maharatna status, the annual turnover should be over 25000 crore Rupees in past three years, as per the guidelines issued by Department of Public Enterprises.
•The net worth of the PSU should be more than 15000 crore Rupees in past three years.
•The net profit should be over 5000 crore Rupees during past three years.

At present, there are seven Maharatna companies, after inclusion of BHEL and GAIL and these companies are - ONGC, Indian Oil, SAIL, NTPC and CIL. Also, there are 14 Navratna companies, including Rashtriya Ispat Nigam Limited and NMDC.

Advance Estimates of National Income, 2012-13

The Central Statistics Office (CSO), Ministry of Statistics and Programme Implementation has released the advance estimates of national income at constant (2004-05) and current prices, for the financial year 2012-13.

2.         These advance estimates are based on anticipated level of agricultural and industrial production, analysis of budget estimates of government expenditure and performance of key sectors like, railways, transport other than railways, communication, banking and insurance, available so far. The advance estimates at current prices are derived by estimating the implicit price deflators (IPDs) at sectoral level from the relevant price indices. The salient features of these estimates are detailed below:

I           ADVANCE ESTIMATES OF NATIONAL INCOME, 2012-13

Estimates at Constant (2004-05) Prices

Gross Domestic Product

3.                  Gross Domestic Product (GDP) at factor cost at constant (2004-05) prices in the year 2012-13 is likely to attain a level of Rs.55,03,476 crore, as against the First Revised Estimate of GDP for the year 2011-12 of Rs. 52,43,582 crore, released on 31^st January 2013. The growth in GDP during 2012-13 is estimated at 5.0 per cent as compared to the growth rate of 6.2 per cent in 2011-12.

4.                  The sectors which registered growth rate of over 5 percent are ‘Construction’, ‘trade, hotels, transport and communication`, `financing, insurance, real estate and business services`, and `community, social and personal services`. There may be slow growth in the sectors of ‘agriculture, forestry and fishing’ (1.8%), manufacturing (1.9%) and electricity, gas & water supply (4.9%). The growth in the mining and quarrying sector is estimated to be (0.4%).

Agriculture

5.         The ‘agriculture, forestry and fishing’ sector is likely to show a growth of 1.8 per cent in its GDP during 2012-13, as against the previous year’s growth rate of 3.6 per cent. According to the information furnished by the Department of Agriculture and Cooperation (DAC), which has been used in compiling the estimate of GDP from agriculture in 2012-13, production of foodgrains is expected to decline by 2.8 per cent as compared to growth of 5.2 per cent in the previous agriculture year. The production of cotton and sugarcane is also expected to decline by 4.0 per cent and 6.5 per cent, respectively, in 2012-13. Among the horticultural crops, production of fruits and vegetables is expected to increase by 3.5 per cent during the year 2012-13 as against 5.1 percent in the previous year.

Industry

6.         The manufacturing sector is likely to show a growth of 1.9 per cent in GDP during 2012-13. According to the latest estimates available on the Index of Industrial Production (IIP), the index of manufacturing and electricity registered growth rates of 1.0 per cent and 4.4 per cent, respectively during April-November, 2012-13, as compared to the growth rates of 4.2 per cent and 9.5 per cent in these sectors during April-November, 2011-12. The mining sector is likely to show a growth of 0.4 per cent in 2012-13 as against negative growth of 0.6 per cent during 2011-12. The construction sector is likely to show a growth rate of 5.9 per cent during 2012-13 as against growth of 5.6 per cent in the previous year. The key indicators of construction sector, namely, cement production and steel consumption have registered growth rates of 6.1 per cent and 3.9 per cent, respectively during April-December, 2012-13.

Services

7.         The estimated growth in GDP for the trade, hotels, transport and communication sectors during 2012-13 is placed at 5.2 per cent as against growth of 7.0 percent in the previous year. This is mainly on account of decline of 3.4per cent and 4.8 per cent respectively in passengers and cargo handled in civil aviation and decline of 3.1 per cent in cargo handled at major sea ports during April-November, 2012-13. There has been an increase of 4.3 per cent in stock of telephone connections as on November 2012. The sales of commercial vehicles witnessed an increase of 0.74 per cent per cent in April-December 2012. The sector, `financing, insurance, real estate and business services`, is expected to show a growth rate of 8.6 per cent during 2012-13, on account of 11.1 per cent growth in aggregate deposits and 15.2 per cent growth in bank credit as on December 2012 (against the respective growth rates of 17.2 per cent and 16.0 per cent in the corresponding period of previous year). The growth rate of `community, social and personal services` during 2012-13 is estimated to be 6.8 per cent.

National Income

8.         The net national income (NNI) at factor cost, also known as national income, at 2004-05 prices is likely to be Rs.47,64,819 crore during 2012-13, as against the previous year`s First Revised Estimate of Rs. 45,72,075 crore. In terms of growth rates, the national income registered a growth rate of 4.2 per cent in 2012-13 as against the previous year’s growth rate of 6.1 per cent.

Per Capita Income

9.         The per capita income in real terms (at 2004-05 prices) during 2012-13 is likely to attain a level of Rs.39,143 as compared to the First Revised Estimate for the year 2011-12 of Rs. 38,037. The growth rate in per capita income is estimated at 2.9 per cent during 2012-13, as against the previous year`s estimate of 4.7 per cent.

Estimates at Current Prices

Gross Domestic Product

10.       GDP at factor cost at current prices in the year 2012-13 is likely to attain a level of Rs. 94,61,979 crore, showing a growth rate of 13.3 per cent over the First Revised Estimate of GDP for the year 2011-12 of Rs. 83,53,495 crore.

National Income

11.       The NNI at factor cost at current prices is anticipated to be Rs. 83,68,571 crore during 2012-13, as compared to Rs. 73,99,934 crore during 2011-12, showing a rise of 13.1 per cent.

Per Capita Income

12.       The per capita income at current prices during 2012-13 is estimated to be Rs. 68,747 as compared to Rs. 61,564 during 2011-12, showing a rise of 11.7 per cent.

II         ESTIMATES OF EXPENDITURES ON GDP, 2012-13

13        Alongwith the Advance Estimates of GDP by economic activity, the CSO is also releasing the Advance Estimates of expenditures of the GDP at current and constant (2004-05) prices. These estimates have been compiled using the data on indicators available from the same sources as those used for compiling GDP estimates by economic activity, detailed data available on merchandise trade in respect of imports and exports, balance of payments, and monthly accounts of central government. As various components of expenditure on gross domestic product, namely, consumption expenditure and capital formation, are normally measured at market prices, the discussion in the following paragraphs is in terms of market prices only.

Private Final Consumption Expenditure

14.       Private Final Consumption Expenditure (PFCE) at current prices is estimated at Rs. 57,05,857 crore in 2012-13 as against Rs. 50,56,219 crore in 2011-12. At constant (2004-05) prices, the PFCE is estimated at Rs. 34, 72,980 crore in 2012-13 as against Rs. 33,34,900 crore in 2011-12. In terms of GDP at market prices, the rates of PFCE at current and constant (2004-05) prices during 2012-13 are estimated at 56.9 per cent and 59.7 per cent, respectively, as against the corresponding rates of 56.3 per cent and 59.2 per cent, respectively in 2011-12.

Government Final Consumption Expenditure

15.       Government Final Consumption Expenditure (GFCE) at current prices is estimated at Rs. 11,86,726 crore in 2012-13 as against Rs 10,42,677 crore in 2011-12. At constant (2004-05) prices, the GFCE is estimated at Rs. 6,60,630 crore in 2012-13 as against Rs. 6,34,559 crore in 2011-12. In terms of GDP at market prices, the rates of GFCE at current and constant (2004-05) prices during 2012-13 are estimated at 11.8 per cent and 11.4 per cent, respectively, as against the corresponding rates of 11.6 per cent and 11.3 per cent, respectively in 2011-12.

Gross Fixed Capital Formation

16.       Gross Fixed Capital Formation (GFCF) at current prices is estimated at Rs. 29,93,873 crore in 2012-13 as against Rs. 27,49,072 crore in 2011-12. At constant (2004-05) prices, the GFCF is estimated at Rs. 19,44,279 crore in 2012-13 as against Rs.18,97,309 crore in 2011-12. In terms of GDP at market prices, the rates of GFCF at current and constant (2004-05) prices during 2012-13 are estimated at 29.9 per cent and 33.4 per cent, respectively, as against the corresponding rates of 30.6 per cent and 33.7 per cent, respectively in 2011-12. The rates of Change in Stocks and Valuables at current prices during 2012-13 are estimated at 3.0 per cent and 2.4 per cent, respectively.

17.       Estimates of gross/net national product, gross/net domestic product and per capita income, alongwith GDP at factor cost by kind of economic activity and the Expenditures on GDP for the years 2010-11 and 2011-12 and 2012-13, at constant (2004-05) and current prices are given in Statements 1 to 6.

Click here to see Annex

RBI panel proposes curbs on import of gold

The working group of the central bank on issues related to gold imports and gold loan NBFCs has proposed to limit import of gold into India, which is putting pressure on India’s current account and threatening the country’s sovereign credit ratings. It has also stated that a combination of demand-reduction and supply-management steps and measures to increase monetization of idle stocks of gold need to be put in place. 

The recommendations, if implemented by the government, will make gold costly and enhance the level of disclosure in gold loans business. This could lead to a tougher business environment for gold loan NBFCs.

The group also suggested that under extreme conditions, the government may also think of putting limits on the volume and value of gold to be imported by banks, and imposing export obligation on bulk gold importers.

It’s not only import of the yellow metal, the RBI panel in its report also suggested to the government to take steps that would make it easier for the authorities to track gold buyers, like payment by cheques for purchases above a threshold limit, use of income tax PAN by NBFCs giving loans over Rs 5 lakh and also use of know-your-customer processes for the buyers.

Although the working group stated that gold loan NBFCs are serving social causes, but it suggested that there was no case for granting these NBFCs a status at par with banks, these entities need to be monitored cautiously and their overdependence on banks for funds should be reduced. The RBI group also recommended that India’s idle gold reserves, which is about 20,000 tonnes at present, should be use to set up a gold bank and this reserve could be put into productive use through exchange-traded funds (ETFs).

On the issue of setting up the gold bank, RBI suggested that it may be given “powers to import, export, trade, lend and borrow gold and deal in gold derivatives.” The panel also suggested new ways to channelize investors’ savings into financial assets backed by gold, rather than they directly buying the metal in physical form.

First Revised Estimates of National Income, Consumption Expenditure, Saving and Capital Formation, 2011-12

The Central Statistics Office (CSO), Ministry of Statistics and Programme Implementation has released the First Revised estimates of National Income, Consumption Expenditure, Saving and Capital Formation for the financial year 2011-12 along with the Second Revised Estimates for the year 2010-11 and Third Revised Estimates for the year 2009-10. As per the revision policy^#1, the First Revised Estimates for the year 2011-12 (earlier called Quick Estimates) have been compiled using industry-wise/institution-wise detailed information instead of the benchmark indicator method.

The estimates of Gross Domestic Product and other aggregates for the years 2009-10 and 2010-11 have been revised on account of use of latest available data on agricultural production, industrial production especially Annual Survey of Industries 2010-11 in lieu of the Index of Industrial Production, government expenditure (replacing Revised Estimates with Actuals for the year 2010-11) and also detailed and more comprehensive data available from various source agencies like Reserve Bank of India and State Directorate of Economics and Statistics.

The salient features of the estimates at aggregate level, which are based on latest available information, are indicated below:

GROSS DOMESTIC PRODUCT AND GROSS NATIONAL INCOME

Gross Domestic Product (GDP) at factor cost at constant (2004-05) prices in 2011-12 is estimated at ` 52,43,582 crore as against ` 49,37,006 crore in 2010-11 registering a growth of 6.2 per cent during the year as against a growth of 9.3 per cent in the year 2010-11. At current prices, GDP in 2011-12 is estimated at ` 83,53,495 crore as against ` 72,66,967 crore in 2010-11, showing an increase of 15.0 per cent during the year, as against an increase of 19.0 per cent in the previous year.

At constant (2004-05) prices, the Gross National Income at factor cost in 2011-12 is estimated at ` 51,96,848 crore as against` 48,82,249 crore in 2010-11 showing a rise of 6.4 per cent during the year, as against an increase of 8.8 per cent in the previous year. At current prices, the Gross National Income in 2011-12 is estimated at ` 82,76,665 crore as compared to `71,85,160 crore in 2010-11, showing a rise of 15.2 per cent during the year, as against an increase of 18.4 per cent in the previous year.

The growth rate of 6.2 per cent in the GDP during 2011-12 has been achieved due to growth in financing, insurance, real estate & business services (11.7%), transport, storage and communication (8.4%), electricity, gas & water supply (6.5%) and trade, hotels & restaurants (6.2%). At constant prices, the primary sector, i.e. agriculture, forestry & fishing has shown a growth of 3.6 per cent during 2011-12 as against 7.9 per cent during the year 2010-11. The growth of secondary sector is 3.5 per cent and that of service sector is 8.2 per cent during 2011-12, as against a growth of 9.2 per cent and 9.8 per cent, respectively, in the previous year.

Gross Domestic Product (GDP) at market prices at constant (2004-05) prices in 2011-12 is estimated at ` 56,31,379 crore as against ` 52,96,108 crore in 2010-11 registering a growth of 6.3 per cent during the year as against a growth of 10.5 per cent in the year 2010-11. At current prices, GDP at market prices in 2011-12 is estimated at ` 89,74,947 crore as against ` 77,95,314 crore in 2010-11, showing an increase of 15.1 per cent during the year, as against an increase of 20.3 per cent in the previous year.

CONSUMPTION EXPENDITURE, SAVING AND CAPITAL FORMATION

As various components of expenditure on Gross Domestic Product, namely, Consumption Expenditure and Capital Formation, are normally measured at market prices, the discussion in the following paragraphs is in terms of market prices.

PRIVATE FINAL CONSUMPTION EXPENDITURE

Private Final Consumption Expenditure (PFCE) at current prices is estimated at ` 50,56,219 crore in 2011-12 as against `43,49,889 crore in 2010-11. At constant (2004-05) prices, the PFCE is estimated at ` 33,34,900 crore in 2011-12 as against `30,88,880 crore in 2010-11. In

terms of GDP at market prices, the rates of PFCE at current and constant (2004-05) prices during 2011-12 are estimated at 56.3 per cent and 59.2 per cent, respectively, as against the corresponding rates of 55.8 per cent and 58.3 per cent, respectively in 2010-11.

DOMESTIC SAVING

Gross Domestic Saving (GDS) at current prices in 2011-12 is estimated at ` 27,65,291 crore as against ` 26,51,934 crore in 2010-11, constituting 30.8% of GDP at market prices as against 34.0% in the previous year. The decrease in the rate of GDS has mainly been due to the decrease in the rates of financial savings of household sector from 10.4% to 8.0%, private

corporate sector from 7.9% to 7.2% and that of public sector from 2.6% to 1.3% in 2011-12 as compared to 2010-11. In absolute terms, the saving of the household sector has increased from ` 18,32,901 crore in 2010-11 to ` 20,03,720 crore in 2011-12, increasing by 9.3% during the year. The saving of private corporate sector has gone up by 4.1% from ` 6,19,370 crore in 2010-11 to ` 6,44,473 crore in 2011-12 . However the saving of public sector has gone down by 41.4% from ` 1,99,662 crore in 2010-11 to ` 1,17,097 crore in 2011-12.

CAPITAL FORMATION

Gross Domestic Capital Formation has increased from ` 28,71,649 crore in 2010-11 to ` 31,41,465 crore in 2011-12 at current prices and it increased from ` 21,20,377 crore in 2010-11 to ` 21,31,839 crore in 2011-12 at constant (2004-05) prices. The rate of Gross Capital Formation at current prices is 35.0 per cent in 2011-12 as against 36.8 per cent in 2010-11. The rate of Gross Capital Formation at constant (2004-05) prices is 37.9 per cent in 2011-12 as against 40.0 per cent in 2010-11.

Within the Gross Capital Formation at current prices, the Gross Fixed Capital Formation amounted to ` 27,49,072 crore in 2011-12 as against ` 24,74,464 crore in 2010-11, increasing by 11.1% during the year. At current prices, the Gross Fixed Capital Formation of the public sector has increased by 9.3% from ` 6,06,245 crore in 2010-11 to ` 6,62,698 crore in 2011-12, that of private corporate sector by 1.0% from ` 8,58,558 crore in 2010-11 to ` 8,67,020 crore in 2011-12, and the household sector by 20.7% from ` 10,09,662 crore in 2010-11 to ` 12,19,354 crore in 2011-12.

The change in stocks of inventories, measured as additions to stocks decreased by 22.7% at current prices, from ` 2,45,113crore in 2010-11 to ` 1,89,384 crore in 2011-12. The decrease is observed due to decrease in change in stocks of public and private corporate sector.

ESTIMATES AT PER CAPITA LEVEL

The per capita income (per capita Net National Income at factor cost) in real terms, i.e. at 2004-05 prices, is estimated at `38,037 for 2011-12 as against ` 36,342 in 2010-11, registering an increase of 4.7 per cent during the year, as against an increase of 7.2% during the previous year.

The per capita income at current prices is estimated at ` 61,564 in 2011-12 as against ` 54,151 for the previous year depicting a growth of 13.7 per cent, as against an increase of 17.1% during the previous year.

The per capita PFCE at current prices in 2011-12 is estimated to be ` 42,065 as against ` 36,677 in the year 2010-11, showing an increase of 14.7% as against an increase of 15.7% in the previous year. The corresponding estimates at constant (2004-05) prices are ` 27,745 and ` 26,045, registering an increase of 6.5% in 2011-12, as against an increase of 7.1% in the previous year.

The estimates of National Product, Consumption Expenditure, Saving and Capital Formation at aggregate and per capita levels for the years 2004-05 to 2011-12 are presented in Statement 1 and the detailed estimates at industry/item level in Statements 2 to 8. The statements on Income & Outlay Account and Capital Finance Account of the Administrative Departments, as also the Price and Quantum Indices are available on the website of the Ministry, www.mospi.gov.in.

# As available on www.mospi.gov.in

Click here to see Statements.

42% workers are now ‘middle-class’: ILO report

The middle class is rising in a big way, especially in developing countries. About 42 per cent of workers, or nearly 1.1 billion, are now ‘middle-class’, living with families on over Rs 225 ($4-13) per person per day, says a new ILO report.

By 2017, the developing world could see the addition of 390 million more workers in the middle class, the International Labour Organisation (ILO) report says.

“Over time, this emerging middle-class could give a much needed push to more balanced global growth by boosting consumption, particularly in poorer parts of the developing world,” said Steven Kapsos, one of the authors of the Global Employment Trends 2013.

Employment growth

However, the report raises a red flag for employment growth in 2013-14, even if there is a moderate pick-up in output growth.

It estimates that the number of unemployed worldwide may rise by 5.1 million to more than 202 million in 2013 and by another 3 million in 2014, half-a-million of which will be youth.

“The indecision of policy-makers in several countries has led to uncertainty about future conditions and reinforced corporate tendencies to increase cash holdings or pay dividends rather than expand capacity and hire new workers,” says the report.

GDP growth

The ILO report noted that in India, growth in investment contributed 1.5 percentage points to the overall GDP growth over the past year, down from 1.8 percentage points in 2011, while the contribution from consumption declined to 2.8 per cent versus 3.2 per cent the previous year.

Job creation, labour productivity

For countries such as India, the report called for focus on both employment creation and labour productivity.

It noted that in India, even where jobs were created, a large number of workers remained in agriculture (51.1 per cent), in the urban informal sector or in unprotected jobs (contract) in the formal sector.

The share of workers in manufacturing was just 11 per cent in 2009-10, no higher than a decade earlier.

Like many regions, growth has failed to deliver a significant number of better jobs in the formal economy.

Formal employment

Most notably in India, the share of formal employment has declined from around 9 per cent in 1999-2000 to 7 per cent in 2009-10, in spite of record growth rates, it said quoting a study.

Using a comparable definition for the latest year available, the report said the share of workers in informal employment in the non-agricultural sector stood at 83.6 per cent in India (2009-10), 78.4 per cent in Pakistan (2009-10) and 62.1 per cent in Sri Lanka (2009).

Significantly, the report noted that unemployment rates increased rapidly for high-skilled workers, especially women.

“Indians with a diploma suffer particularly, with unemployment rates reaching 34.5 per cent for women and 18.9 per cent for men during 2009-2010,” it added.

RBI hikes FII limit in Govt securities, corporate bonds by $5 billion

The Reserve Bank today hiked FII investment limits in Government securities and corporate bonds by $5 billion each, taking the total cap in domestic debt to $75 billion, with a view to bridging the current account deficit.

Further liberalising the norms, the three-year lock-in period for foreign institutional investors (FIIs) purchasing Government securities (G-Secs) for the first time has been done away with, RBI said.

The sub-limit of $10 billion for investment by FIIs and long-term investors in G-Secs stands enhanced by $5 billion, it said.

The limit in corporate debt, other than infrastructure sector, stands enhanced from $20 billion to $25 billion, RBI said.

With an increase of $5 billion in each of the two categories, FIIs and long-term investors can now invest $25 billion in G-Secs and $50 billion in corporate debt instruments, taking the total to $75 billion.

The earlier FII investment limit in G-Secs was $20 billion and for corporate debt it was $45 billion, including a sub-limit of $25 billion for infra bonds.

RBI further said: “Residual maturity condition shall not be applicable for the entire sub-limit (in G-Secs) of $15 billion but such investments will not be allowed in short-term paper like Treasury Bills, as hitherto”.

The overall FII limit of domestic debt is distributed through a host of categories across Government, corporate and infrastructure debt.

Long-term investors include sovereign wealth funds, multilateral agencies, pension funds and foreign central banks.

Government, which is battling a high current account deficit (CAD) — the gap between inflows and outflows of foreign funds — is trying to attract more foreign funds into the country.

The CAD touched a record high of 5.4 per cent in the July-September quarter of the current fiscal.

In order to check the outflow of foreign currency, the Government recently hiked the import duty on gold and also took steps to encourage mutual funds to park their gold in deposit schemes offered by banks.

As a measure of further relaxation, the RBI added that it had dispensed with the one-year lock-in period on holding infrastructure bonds.